According to sources, Guangdong will soon introduce a new policy to facilitate the relocation of factories to lower-cost regions within the province in view of rising land and labour costs in the Pearl River Delta (PRD) region. The proposed policy is designed to assist existing factories in the PRD to relocate to the more remote regions within the province rather than moving to other provinces and regions further north. Hong Kong-invested factories will benefit from this new policy as they can look for less expensive yet suitable locations within Guangdong to continue their operations.

Expected to be approved by the provincial governor and announced in January 2005, the new policy will serve as a guiding policy for facilitating industrial relocation from the PRD and promoting investment in the relatively backward regions. The initiative also augurs well for a new era of coordinated regional economic development within Guangdong.

Local authorities have been quick to embrace the new policy. For instance, Shaoguan city's Shixing county and Dongguan city's Shilong county have already reached a preliminary letter of intent on cooperation after several rounds of negotiation. Shixing will offer "raw" land in Shashui to be developed into industrial land by Shilong. Shilong will undertake the construction of basic facilities for the plot and carry out investment promotion. Meanwhile, Shanwei and Panyu are understood to be engaged in a dialogue on this issue too. In early October 2004, Guangdong governor Huang Huahua stressed during a visit to Shanwei that the city had offered to take over the industries to be relocated from PRD.